Segment Information

6 Months Ended

Jun. 30, 2012

Segment Information

16. Segment Information

Our three operating segments, which are also our reportable segments, are: North America, EMEA (Europe/Middle East/Africa), and APSA (Asia-Pacific/South America). Our reportable segments are based on internal organization of the business used by management for making operating decisions and assessing performance. Key countries/markets included in North America are the United States, Canada, and Mexico. Key countries/markets included in EMEA are Germany, Spain, the United Kingdom, Russia, Turkey, Ireland, Italy, Hungary, Czech Republic, Romania, South Africa, North America Duty Free, and Europe Travel Retail. Key countries/markets included in APSA are Australia, New Zealand, Southeast Asia, China, Brazil, India, South Korea and Japan.

Each operating segment derives revenues from the sale of distilled spirits. Segment net sales is net sales excluding items considered by management to be unusual or infrequent in nature. The measure of segment profitability regularly reviewed by the chief operating decision maker is operating income before charges/gains that management believes are not considered indicative of the segments’ underlying operating performance; consequently segment results presented in accordance with GAAP exclude such items. Charges/gains excluded from segment results include restructuring charges, other charges related to restructuring initiatives that cannot be reported as restructuring charges under GAAP, acquisition and integration-related costs, business separation costs, and the one-time sales impact of transitioning to our long-term distribution agreement in Australia. Unallocated corporate costs in 2011 reflect the estimated, incremental historical Fortune Brands corporate structure as compared to the estimated Beam corporate structure following the Spin-Off. The Company estimated its lower corporate cost structure based on analysis and projections of costs expected to be incurred by the Company had the Separation occurred January 1, 2011.

Financial information for each segment is presented in the tables below (in millions):

	Three months ended June 30,						Six months ended June 30,
	2012			2011			2012			2011
Net sales:
North America	$	370.1		$	334.1		$	679.4		$	608.8
EMEA		111.7			119.1			219.0			214.9
APSA		113.7			117.2			230.9			224.4
Segment net sales	$	595.5		$	570.4		$	1,129.3		$	1,048.1
Australia distribution one-time sale		—			—			—			46.3
Consolidated net sales	$	595.5		$	570.4		$	1,129.3		$	1,094.4
Income from continuing operations before income taxes:
North America	$	105.4		$	95.1		$	204.0		$	178.0
EMEA		23.4			24.6			40.8			45.0
APSA		22.8			19.4			44.8			34.2
Total segment income	$	151.6		$	139.1		$	289.6		$	257.2
Deduct:
Business separation costs (Note 6)		13.8			8.0			13.8			17.2
Restructuring charges (gains) (Note 7)		0.4			(0.2	)		2.7			1.9
Other charges (gains) (Note 7)		11.7			1.4			16.3			(18.2	)
Unallocated corporate costs		—			10.2			—			24.6
Consolidated operating income	$	125.7		$	119.7		$	256.8		$	231.7
Interest expense		26.9			29.1			51.4			60.0
Other (income) expense		(22.5	)		3.0			(28.4	)		3.1
Income from continuing operations before income tax	$	121.3		$	87.6		$	233.8		$	168.6

Refer to Note 7, Restructuring and Other Charges, for more information on restructuring charges (gains) and other charges (gains).